In a recent observation, the Supreme Court has emphasized the importance of clearly stating the intent behind its judgments, particularly to resolve the confusion faced by High Courts and subordinate courts in distinguishing between decisions made for resolving disputes and those intended to set legal precedents.
A bench comprising Justice P S Narasimha and Justice Pankaj Mithal noted that while the Supreme Court performs a dual role of decision-making and precedent-setting, not every judgment issued under Article 136 of the Constitution is meant to be a binding precedent under Article 141.
The bench observed, “As an institution, our Supreme Court performs the twin functions of decision-making and precedent-making. A substantial portion of our jurisdiction under Article 136 is reflective of regular appellate disposition of decision-making.”
The Court pointed out that while decisions made to resolve specific disputes between parties may not always carry the weight of a binding precedent, they still often influence the legal framework when they depart from earlier rulings. The judges expressed awareness of the challenges faced by lower courts in determining whether a judgment is for decision-making or for setting a precedent, especially when even an obiter dictum (a remark made in passing) has been treated as a binding precedent in certain cases.
“We are aware of the difficulties that high courts and the subordinate courts face in determining whether the judgment is in the process of decision-making or precedent-making, particularly when we have also declared that even an obiter of this court must be treated as a binding precedent for the high courts and the courts below,” the bench said.
The Court further clarified that in decision-making cases, it takes care to indicate when the decision should not be regarded as a precedent, signifying the need for careful and explicit communication of a judgment’s intent. “It is therefore necessary to be cautious in our dispensation and state whether a particular decision is to resolve the dispute between the parties and provide finality or whether the judgment is intended to and in fact declares the law under Article 141,” the bench emphasized.
This statement comes in the context of a case where the Court referred to a larger bench the issue of whether unregistered Micro, Small, and Medium Enterprises (MSMEs) could avail themselves of dispute settlement under Section 18 of the MSMED Act, 2006. The appellant in this case had relied on earlier precedents, but the Court noted that those precedents were not directly relevant to the matter at hand and were meant to resolve specific disputes rather than establish universal binding authority.
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